US Consumer Confidence Tumbles

U.S. consumer confidence tumbled in September to its lowest level in almost six years. It was also the biggest monthly drop since 1990 during the Gulf crisis. The survey was released Tuesday by the Conference Board, a private business research group.

Most of the survey was done before the September 11 terrorist attack on New York and Washington. But experts anticipated a decline in confidence anyway because of all the announced job lay-offs in recent weeks. The latest unemployment report showed the jobless rate climbed from 4.5 to 4.9 percent.

"That 4.9 percent was also a shock, a minor shock compared to September 11, but still a shock that, yes, those announced lay-offs were starting to hit in a sense, real people. And that's why [confidence] was going to be down anyway, probably not quite as much. But it would have been down significantly because of that," he said.

Economists worry about consumer attitudes. Falling confidence could slow consumer spending, which has been a key element in keeping the U.S. economy out of recession. A growing number of experts now believe a recession is imminent, if not already here.

Because of the timing of the survey, interrupted by the events of September 11, the Conference Board says October's reading will be a more accurate reflection of consumer sentiment. However, experts warn the numbers could be even worse because Americans by then will likely have a better idea of the economic damage caused by the terrorist attack.

There was a positive note in the survey. Sales of existing homes actually rose in August to a record, leading some economists to conclude that consumer confidence is still healthy enough. The housing sector has remained strong throughout the economic slowdown. Experts say housing normally weakens considerably just before a recession.